Deutsche Global Infrastructure Fund

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Amie Walsh
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1 1 st quarter 2018 Deutsche Global Infrastructure Fund A compelling option for a diversified portfolio

What is infrastructure? Infrastructure is all around us.

orderly operations transportation, energy, communications and water, for

Indeed, infrastructure serves as the backbone of our society, providing

Examples of infrastructure assets include ports, toll roads, pipelines,

Infrastructure can be broken down into two broad buckets: social and

Economic infrastructure Social infrastructure Transportation Energy

rail Gas networks Electricity networks Power generation Renewable energy

Water and sewage Education facilities Health care facilities Correctional

developing markets, while chronic underspending on existing infrastructure

2 What is infrastructure? Infrastructure is all around us. It consists of the permanent assets society requires to facilitate its orderly operations transportation, energy, communications and water, for example. Indeed, infrastructure serves as the backbone of our society, providing basic services we need to function. Examples of infrastructure assets include ports, toll roads, pipelines, transmission lines, cell phone towers and water utilities. Infrastructure can be broken down into two broad buckets: social and economic. Economic infrastructure Social infrastructure Transportation Energy Communication Other Bridges Toll roads Tunnels Airports Sea ports Freight rail Gas networks Electricity networks Power generation Renewable energy Wireless cell towers Satellite systems Parking garages Storage facilities Water and sewage Education facilities Health care facilities Correctional facilities Public transportation A number of global trends are driving the need for infrastructure investment. Population growth and increasing urbanization are fueling growth in developing markets, while chronic underspending on existing infrastructure is driving demand in developed markets. Additionally, the discovery of new energy sources, such as shale gas, is driving the continued development of infrastructure-related activities. The mega-trends driving the growth of infrastructure Population growth Urbanization World trade increases Government deficits and under spending New energy sources 2 Deutsche Global Infrastructure Fund

3 How to invest in infrastructure: the global infrastructure universe There is no standard definition of precisely what infrastructure investing entails, so defining the universe can be challenging. In fact, the infrastructure universe is a broad asset class that includes diverse businesses ranging from engineering and construction firms to airports and seaports. The following illustration breaks the listed infrastructure universe into three distinct categories. Thematic investment Type of company Industries Broad companies tend to own infrastructurerelated businesses, such as construction companies and diversified communications providers, rather than direct infrastructure assets. Engineering and construction Timber Diversified operations Power generation Shipping Core companies exhibit some characteristics of pure-play companies by virtue of regulation or contractual agreement, and many have loosely related infrastructure side businesses, but they typically have lower margins, are not capital intensive and/or do not derive cash flows from long-duration contracts. Infrastructure services Integrated utilities Railways Diversified utilities Diversified infrastructure Asset investment Pure-play companies typically own or operate assets that naturally exhibit fundamental infrastructure characteristics, such as high barriers to entry and relatively inelastic demand. Transmission and distribution Oil and gas storage and transportation Toll roads Seaports Airports Communications (towers and satellites) Water Deutsche Global Infrastructure Fund: a pure-play focus Deutsche Global Infrastructure Fund focuses on the pure-play portion of the universe, which is assetbased. That means the fund invests in the securities of infrastructure firms that primarily own and operate infrastructure assets as their core businesses. Pure-play infrastructure investing best replicates the unique investment characteristics of infrastructure as an asset class. Deutsche Global Infrastructure Fund 3

Pure-play investing at work Not all infrastructure is created equal.

Many infrastructure-related companies have different business models and characteristics. The fund selects specific portions of the universe on which to focus.

The energy value chain Upstream Midstream Downstream Exploration and production Storage and transportation Marketing and supply Description Discovery and production of oil and natural gas

4 Pure-play investing at work Not all infrastructure is created equal. Focusing on the pure-play portion of the infrastructure universe allows Deutsche Global Infrastructure Fund to replicate the investment characteristics of the asset class. Many infrastructure-related companies have different business models and characteristics. The fund selects specific portions of the universe on which to focus. Within the energy sector, for example, the fund focuses on the mid-stream portion of the value chain, which exhibits the natural characteristics of infrastructure as an asset class. The energy value chain Upstream Midstream Downstream Exploration and production Storage and transportation Marketing and supply Description Discovery and production of oil and natural gas Transportation of gas oil via small-or largediameter pipes over various distance; storage of excess capacity Purchasing of refined oil and gas for delivery to end users Characteristics Dominated by energy company majors; economic fundamentals are highly dependent upon commodity prices Monopolistic in nature, stable revenues; are not highly correlated to underlying commodity prices Highly competitive, typically lower-margin business Company examples Exxon, Conoco, Chesapeake Energy Enbridge, TransCanada Valero Regulation Minimal Regulated Less regulated Deutsche Global Infrastructure Fund focuses on the midstream portion of the value chain. As of 2/28/18, Deutsche Global Infrastructure Fund held the following percentages in the securities mentioned: Chesapeake Energy, 0%; Exxon, 0%; Conoco, 0%; Enbridge, 3.8%; TransCanada, 4.5%; Valero, 0%. 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. 4 Deutsche Global Infrastructure Fund

5 Why consider infrastructure as an asset class? Infrastructure as an asset class offers many important characteristics: monopolistic qualities; services of an essential nature to society; a potential hedge against rising inflation (since hard assets tend to retain their values); and stable, predictable cash flows. Indeed, infrastructure cash flows have been resilient. Infrastructure securities history of relatively predictable cash flows and high dividend yields demonstrate their underlying defensiveness. Listed infrastructure has shown positive EBITDA (earnings before interest, taxes, depreciation and amortization) growth for more than a decade, including two recessionary periods. Global equities have not shown this same resilience, and in fact have shown negative growth during certain calendar years. Median annual EBITDA growth (local currency) 1.4% 6.3% 8.2% 15.0% 7.6% 8.6% 7.9% 12.3% 12.5% 14.5% 16.1% 15.9% 14.6% 12.7% 15.2% 8.1% 12.3% 4.6% 11.2% 6.2% 7.7% 17.1% 8.2% 5.5% 7.0% 6.3% 7.7% 10.6% 7.8% 5.3% 6.6% 5.5% Global infrastructure equities Global equities Source: Bank of America Merrill Lynch as of 12/31/16, latest data available. Global equities are represented by the MSCI World Index. Global infrastructure equities are represented by the Dow Jones-Brookfield Global Infrastructure Index. Shaded bar indicates a recession, which took place from December 2007 to June Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. See back page for index definitions. Fast fact EBITDA which is essentially net income with interest, taxes, depreciation and amortization added back to it is an indicator of financial performance. It is used to compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. Deutsche Global Infrastructure Fund 5

6 Deutsche Global Infrastructure Fund: compelling upside/downside capture The characteristics of the infrastructure asset class specifically the pure-play approach have helped Deutsche Global Infrastructure Fund deliver differentiated investment characteristics. The companies in which the fund invests tend not to be as tied to and dependent upon overall economic cycles. This can be demonstrated by the strong upside/downside capture ratios of the fund vs. the MSCI World Index. Solid upside capture with dramatically better downside capture vs. MSCI World Index (Since inception as of 3/31/18*) 71.31% 59.54% Upside capture Downside capture *The fund inception is 6/24/08. Source: Morningstar as of 3/31/18. Past performance is historical and does not guarantee future results. Data shown is for Class S shares. The values of equity investments are more volatile than those of other securities. Fixed-income investments are subject to interest-rate risk, and their values will decline as interest rates rise. Commodities and real estate should be considered part of a diversified portfolio; market-price movements, regulatory changes, economic changes and adverse political or financial factors could have a significant impact on performance. See back page for definitions. Fast fact Upside capture ratio measures a portfolio s performance in up markets relative to the investment universe (with up markets defined as those that have a positive monthly return). The higher the upside capture ratio, the better the portfolio performed during a market upturn. Downside capture ratio measures a portfolio s performance in down markets relative to the investment universe (with down markets defined as those that have a negative monthly return). The lower the downside capture ratio, the better the portfolio performed during a market downturn. 6 Deutsche Global Infrastructure Fund

7 Deutsche Global Infrastructure Fund: strong historical return and low volatility The pure-play infrastructure characteristics we have discussed along with a talented portfolio management team have helped Deutsche Global Infrastructure Fund deliver compelling investment performance, including attractive returns and lower volatility compared to global equities. Strong returns (Since inception as of 3/31/18*) Low volatility (Since inception as of 3/31/18*) 6.69% 6.06% 13.35% 16.18% Deutsche Global Infrastructure Fund (S shares) MSCI World Index Deutsche Global Infrastructure Fund (S shares) MSCI World Index Average annual total returns and expense ratios (as of 3/31/18 and latest prospectus) 1-year 3-year 5-year Since inception Inception date Gross/net expense ratio Class INST 0.27% 0.37% 5.36% 6.76% 6/24/ %/1.11% Class S 0.21% 0.29% 5.27% 6.69% 6/24/ %/1.18% *The fund inception is 6/24/08. Source: Morningstar as of 3/31/18. Performance is historical and does not guarantee future results. Investment return and principal fluctuate so your shares may be worth more or less when redeemed. Current performance may differ from data shown. Please visit for the fund s most recent month-end performance. Performance includes reinvestment of all distributions. Not all share classes are available to all investors. A minimum investment of $1 million is required to open an account for Institutional shares. The net expense charge for this fund does not include any fee waivers. Volatility is represented by standard deviation. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. See back page for definitions. Deutsche Global Infrastructure Fund 7

8 Deutsche Global Infrastructure Fund: solid Sharpe ratios and low beta Strong returns and low volatility over the since inception period have led to a compelling Sharpe ratio and low beta vs. global equities. Increased returns and decreased volatility have raised Sharpe ratios (Since inception Sharpe ratios, as of 3/31/18*) Deutsche Global Infrastructure Fund, Class S shares MSCI World Index Low beta indicates powerful diversification potential (Since inception beta, as of 3/31/18*) Deutsche Global Infrastructure Fund, Class S shares MSCI World Index Beta 1-year 3-year 5-year Deutsche Global Infrastructure Fund (Class S) MSCI World Index *The fund inception is 6/24/08. Source: Morningstar as of 3/31/18. Performance is historical and does not guarantee future results. Volatility is represented by standard deviation. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. See page 10 for standardized performance information and expense ratios. See back page for definitions. 8 Deutsche Global Infrastructure Fund

9 Deutsche Global Infrastructure Fund: a proven track record of minimizing downside risk Of the 11-largest, peak-to-trough corrections in the MSCI World Index since 2008, Deutsche Global Infrastructure Fund has outperformed the index in 10 of these 11 periods, with an average outperformance of 5.31%. With increased volatility in today s market, consider a fund with a proven track record of minimizing downside risk. Consider a pure-play approach to infrastructure to potentially mitigate downside risk The characteristics of the infrastructure asset class specifically the pure-play approach have helped Deutsche Global Infrastructure Fund deliver differentiated investment characteristics. The companies in which the fund invests tend not to be as tied to and as dependent upon overall economic cycles, which can be demonstrated by the fund s strong since inception* downside capture ratio of 59.54% vs. the MSCI World Index. TOLSX performance during the largest peak-to-trough corrections in the MSCI World Index ( ) 10% 0% 0.53% 10% 20% 30% 10.45% 15.62% 5.63% 21.98% 3.43% 11.88% 1.70% 6.29% 8.32% 6.04% 3.41% 0.28% 4.92% 9.81% 11.95% 8.67% 13.88% 2.98% 5.76% 40% 50% 43.37% 50.83% Solid upside capture; strong downside capture (since inception* as of 3/31/18) Upside capture Downside capture 60% TOLSX vs. MSCI World Index 71.31% 59.54% 6/24/08 3/9/09 Global financial crisis 4/15/10 6/30/10 Double dip recession worries 5/2/11 10/4/11 Debt ceiling/ U.S. debt downgrade 3/20/12 6/4/12 Eurozone crisis 9/17/12 11/16/12 Eurozone crisis 5/23/13 6/24/13 Taper tantrum 1/8/14 2/6/14 Ukraine/Russia crisis 7/7/14 10/7/14 Global macro slowdown worries 8/10/15 9/29/15 China currency devaluation 12/1/15 2/11/16 Commodity price concerns 6/22/16 6/27/16 Brexit Shock Deutsche Global Infrastructure S MSCI World NR USD * TOLSX inception date is 6/24/08. Source: Morningstar as of 3/31/18. Performance is historical and does not guarantee future results. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. See last page for definitions. Deutsche Global Infrastructure Fund 9

10 The potential benefits of adding infrastructure assets to a portfolio We believe infrastructure should be considered as part of a well diversified portfolio based on its unique investment characteristics. Adding infrastructure to a traditional portfolio of stocks and bonds can potentially improve returns while lowering volatility, thus improving risk-adjusted returns. Sample traditional diversified portfolio 5-year Return 8.10% Volatility 6.25% Sharpe ratio 1.22 Cash 5% Bonds 33% International stocks 10% Small-cap stocks 8% Large-cap stocks 44% Sample diversified portfolio with infrastructure 5-year Return 7.94% Volatility 6.13% Sharpe ratio 1.22 Cash 4% Infrastructure 10% Bonds 33% International stocks 5% Small-cap stocks 6% Large-cap stocks 42% Source: Morningstar as of 3/31/18. Performance is historical and does not guarantee future results. For illustrative purposes only. Data for the traditional portfolio for the one- and three-year periods is as follows: return, 8.99%/6.50%; volatility, 4.87%/6.44%; Sharpe ratio, 1.53/0.92. Data for the portfolio with infrastructure for the one- and three-year periods is as follows: return, 8.02%/6.14%; volatility, 4.76%/6.31%; Sharpe ratio, 1.38/0.89. Asset-class representation is as follows: bonds, Bloomberg Barclays U.S. Aggregate Index; cash, Citigroup 3-Month Treasury Bill Index; infrastructure, Dow Jones-Brookfield Global Infrastructure Index; international stocks, MSCI EAFE Index; large-cap stocks, S&P 500 Index; small-cap stocks, Russell 2000 Index. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. Volatility is represented by standard deviation. See page 10 for standardized performance information and expense ratios. See back page for definitions. Where does infrastructure fit in a portfolio? Infrastructure securities can offer investors various diversification benefits. Most investor portfolios are dominated by traditional equities (for capital appreciation) and bonds (for low volatility and yield). Think of infrastructure securities as a hybrid investment: an equity security with bond-like characteristics that is backed by real assets. Infrastructure can be used as an equities diversifier or as part of an alternative real-return allocation similar to commodities and real estate. 10 Deutsche Global Infrastructure Fund

11 A prominent infrastructure securities manager The DWS alternatives platform offers access to broad resources including a direct infrastructure business (which has $10.2 billion in direct infrastructure assets) as of 9/30/17 and real estate securities business (which has $8.8 billion in assets under management) as of 9/30/17. DWS is an asset leader Has $11.6 billion in listed infrastructure security assets under management as of 9/30/17 Has 48 direct infrastructure assets under management valued at $10.2 billion as of 9/30/17 Has made 89 acquisitions since 1994 as of 9/30/17 DWS is a thought leader Uses a systematic valuation methodology that adapts to different infrastructure and market conditions Uses a robust analytical framework that combines in-depth due diligence and proprietary financial modeling Utilizes a pure-play focus that seeks to best replicate investment characteristics of the infrastructure asset class in order to provide strong risk-adjusted returns relative to other asset classes DWS real estate and infrastructure team locations London Westborough Luxembourg Warsaw Seattle Chicago Paris Frankfurt San Francisco Costa Mesa New York Zurich Madrid Milan Glen Carbon Bethesda Dallas Atlanta Tokyo Seoul Shanghai Hong Kong Singapore Sydney Source: DWS as of 9/30/17 unless otherwise noted. AUM represents the gross asset value (including leverage) of assets managed for third parties and the net asset value (excluding leverage) of proprietary positions and includes Deutsche Wealth Management assets. It excludes assets managed by the Australian team (HVP Plantations, Matariki Forests, Ulan Coal, Kestrel Coal and Crinum). DWS has also made principal investments in infrastructure assets, the management of which has subsequently been transferred to other areas of Deutsche Bank. Northern Gas Networks (NGN) is included in the Australian AUM as NGN is managed by the Australian team. Deutsche Global Infrastructure Fund 11

Nasdaq symbols A C INST S R6 T Deutsche Global Infrastructure Fund TOLLX TOLCX TOLIX TOLSX TOLZX TOLTX Definitions The Bloomberg Barclays U.S. Aggregate Index tracks the performance of the broad U.S. investment-grade, fixed-rate bond market, including both government and corporate bonds.

12 Nasdaq symbols A C INST S R6 T Deutsche Global Infrastructure Fund TOLLX TOLCX TOLIX TOLSX TOLZX TOLTX Definitions The Bloomberg Barclays U.S. Aggregate Index tracks the performance of the broad U.S. investment-grade, fixed-rate bond market, including both government and corporate bonds. The Citigroup 3-Month Treasury Bill Index tracks the performance of U.S. Treasury obligations with maturities of three months. The Dow Jones-Brookfield Global Infrastructure Index tracks the performance of infrastructure companies. The MSCI EAFE Index tracks the performance of stocks in select developed markets outside of the United States. The MSCI World Index tracks the performance of stocks in select developed markets around the world, including the United States. The Russell 2000 Index tracks the performance of the 2,000 smallest stocks in the Russell 3000 Index. The S&P 500 Index tracks the performance of 500 leading U.S. stocks and is widely considered representative of the U.S. equity market. 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. Term definitions Beta measures a security s sensitivity to the movements of the fund s benchmark or the market as a whole. A beta of greater than one indicates more volatility than the benchmark or market, while a beta of less than one indicates less volatility. Sharpe ratio measures an investment s performance per unit of risk for a given period. 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. Upside/downside capture ratio measures a portfolio s performance in up/down markets relative to the investment universe (with up/ down markets defined as those that have a positive/negative monthly return); the higher/lower the upside/downside capture ratio, the better the portfolio performed during a market upturn/downturn. Nothing contained herein is fiduciary or impartial investment advice that is individualized or directed to any plan, plan participant, or IRA owner regarding the advisability of any investment transaction, including any IRA distribution or rollover. Important risk information Any fund that concentrates in a particular segment of the market will generally be more volatile than a fund that invests more broadly. Emerging markets tend to be more volatile and less liquid than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Investing in foreign securities presents certain risks, such as currency fluctuations, political and economic changes, and market risks. This fund is nondiversified and can take larger positions in fewer issues, increasing its potential risk. The fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details. Obtain a prospectus To obtain a summary prospectus, if available, or prospectus, download one from talk to your financial representative or call (800) 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. All investments involve risk, including potential loss of principal. Investment products: No bank guarantee Not FDIC insured May lose value The brand DWS represents DWS Group GmbH & Co. KGaA and any of its subsidiaries, such as DWS Distributors, Inc., which offers investment products, or Deutsche Investment Management Americas Inc. and RREEF America L.L.C., which offer advisory services. DWS Distributors, Inc. 222 South Riverside Plaza Chicago, IL service@dws.com Tel (800) DWS Group GmbH & Co. KGaA. All rights reserved. PM (4/18) R DGIF-600

06/17. Global listed infrastructure investing. A pure-play approach to an essential asset class. What is listed infrastructure?

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