EFTA01459056.pdf

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Target prices are inherently imprecise and a product of the analyst's judgment. The financial instruments discussed in this report may not be suitable for all investors and investors must make their own informed investment decisions. Prices and availability of financial instruments are subject to change vrithout notice and investment transactions can load to losses as a result of price fluctuations and other factors. If a financial instrument is denominated in a currency other than an investor's currency. a change in exchange rates may adversely affect the investment. Past performance is not necessarily Indicative of future results. Unless otherwise indicated, prices are current as of the end of the previous trading session, and are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank. subject companies, and in some cases. other parties. Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise to pay fixed or variable interest rates. For an investor who is long fixed rate instruments (thus receiving these cash flows). increases in interest rates naturally lilt the discount factors applied to the expected cash flows and thus cause a loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the loss. Upside surprises In inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in asses holding limits for different types of investors), changes in fax policies, currency convertibility (Which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and settlement issues related to local clearing houses aro also important risk factors to be considered. The sensitivity of fixed income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depeeciation, or to specified interest rates - these are common in emerging markets. It is important to note that the index fixings may -- by construction - lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or mimic' is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is also important to acknowledge that funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Naturally, options on swaps (swaptionsl also bear the risks typical to options in addition to the risks related to rates movements. Derivative transactions involve numerous risks including. among others, market, counterparty default and illiquidity risk. The appropriateness or otherwise of these products for use by investors is dependent on the investors' own circumstances including their tax position. their regulatory environment and the nature of their other assets and liabilities. and as such, investors should take expert legal and financial advice before entering into any transaction similar to or inspired by the contents of this publication. The risk of loss in futures trading and options. loreign or domestic. can be substantial. As a result el the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited. Trading in options involves risk and is not suitable for all investors. Prior to buying or selling an option investors must review the "Characteristics and Risks of Standardized Options", at http://www.optionsclearing.com/abouVpublications/charactot -riskstsp. If you are unable to access the website please contact your Deutsche Bank representative for a copy of this important document. Participants in foreign exchange transactions may Incur risks arising from several factors, including the following: ( ii exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic. political and copulatory events. events in equity and debt markets and changes in interest rates: and bill currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs, whose values are affected by the currency of an underlying security, effectively assume currency risk. Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. United States. Approved and/or distributed by Deutsche Bank Securities Incorporated. a member of FINRA. NFA and SIPC. Non-U.S. analysts may not be associated parsons of Deutsche Bank Securities Incorporated and therefore may not be subject to FINRA regulations concerning communications with subject company, public appearances and securities hold by the analysts. Germany: Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under German Banking Law (competent authority: European Central Bank) and is subject to supervision by the European Central Bank and by Balin, Germany's Federal Financial Supervisory Authority Deutsche Bank • t.N101111 t) corn hVpdresrusevtstr.earrtistr.fa 21 .,eHnt nt ortopecial— resell - -crn.e701.) CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0119268 CONFIDENTIAL SDNY_GM_00265452 EFTA01459056