DWS STRUCTURED INVESTMENT SOLUTIONS
MLI PERSPECTIVES | SEPTEMBER 2011










Chris Warren,
Managing Director
Head of Product Asia Pacific ex-Japan		 So, what’s all the fuss about Structured Products?

For a relatively small segment of the investment universe, much has been written lately about structured products, also known as Market-linked Investments. Unfortunately, we believe much of it has been at best misleading and more frequently just plain wrong. On a monthly basis, we will attempt to shed some light on Market-linked Investments in a balanced and straightforward manner.

Recently, much attention has been focused upon the credit risk associated with Market-linked Investments and rightly so given market events and the overall economic situation. However, we believe most of this attention, while no doubt well intended, has been misguided. One commentator breathlessly railed about how Market-linked Investments are nothing more than an unsecured loan to the issuer!  Another noted that Market-linked Investments have default risk!

While both of these observations are true, they largely miss the point: virtually all debt instruments - whether plain vanilla or structured – are unsecured loans to the issuer and therefore entail credit risk, also called default risk.  In this regard, Market-linked Investments are no different than most unsecured bonds or notes – therefore this criticism falls flat – unless, of course, one is prepared to completely exit from virtually all such products.

Default risk – often described in terms of the creditworthiness of the issuer – is an attribute of notes, bonds and CDs regardless of whether they are plain vanilla or structured.  Consequently, credit risk should be carefully considered and understood when making any unsecured investment including Market-linked Investments.  For Market-linked Investments, knowing your issuer is no less important than knowing your bank, your insurer or any other financial counterparty.

So, given much of the misinformation out there what do we think financial advisors and investors should focus on with regard to Market-linked Investments?  First and foremost, do not invest in any financial product that you do not understand.  At a minimum, you should understand the product’s main features, the minimum and maximum possible return (if applicable) as well as the major risks of investing – including, in particular, default or issuer credit risk and whether or not the investment objective of the product is consistent with your own investment objectives.

If you or your financial advisor cannot understand the basic features of any investment product you should not invest.  This common sense rule is applicable to any financial product not just Market-linked Investments.

Market-linked Investments are neither inherently good nor bad.  They do not offer investors a “free lunch”.  They can be more or less risky depending upon the particular type, but the major risks they entail – credit risk, liquidity risk and complexity - are common to many investment products.    Certain Market-linked Investments are not appropriate for some investors.  Not surprisingly, the same may be said of any category of investment product.  In the coming weeks we will assess other important topics relating to Market-linked investments such as complexity, liquidity, product usage and more.

Thank you for visiting our web-site.  Please contact your wholesaler or DWS Structured Investment Solutions for additional information.

The opinions and forecasts expressed are those of Chris Warren as of June 14, 2011, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security.



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Risk Considerations
Before purchasing Market-Linked Notes, Securities or CDs (collectively referred to as "Market-Linked Investments"), investors should carefully consider the risks associated with an investment in the Market-Linked Investments and whether the Market-Linked Investment is a suitable investment for them. For Market-Linked Investments that offer full or limited return of principal, any return of principal is only if the Market-Linked Investment is held to maturity. On certain Market-Linked Investments with coupon payment features, investors may not receive coupon payments, and each coupon payment may be limited to any coupon cap stated on the relevant prospectus or disclosure statement. On certain Market-Linked Investments with basket components, changes in the closing prices of the basket components may offset each other. Economic and market factors may influence the value of the Market-Linked Investments. Market-Linked Investments are subject to liquidity risk, as a secondary market may not be available. Before investing, prospective investors should read the prospectus or disclosure statement, as applicable, relating to the particular Market-Linked Investment. In addition, investors are encouraged to consult with their investment, legal, accounting, tax and other advisors in connection with any investment in a Market-Linked Investment.

Disclaimer Pertaining to Wells Fargo Bank, N.A. issued Certificates of Deposit (CDs)
You may revoke your offer to purchase the CDs at any time prior to the time at which we accept such offer by notifying the applicable broker. We reserve the right to change the terms of, or reject any offer to purchase, the CDs prior to their issuance. We will notify you in the event of any changes to the terms of the CDs, and you will be asked to accept such changes in connection with your purchase of any CDs. You may also choose to reject such changes, in which case we may reject your offer to purchase the CDs.

Wells Fargo Bank N.A. and its affiliates are neither sponsored by nor affiliated with DWS Investments, Deutsche Investment Management Americas, Inc., or any of their respective affiliates.

This material is not intended as an offer or solicitation for the purchase or sale of any Wells Fargo Bank N.A. financial instrument.

The CDs, financial instruments or strategies mentioned herein may not be suitable for all investors. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation of particular final instruments or strategies to you. Before acting on any investment recommendations, you should consider whether it is suitable for your particular circumstances and speak with your financial advisor.

Disclaimer Pertaining to BMO Harris Bank N.A. issued Certificates of Deposit (CDs)
BMO Harris Bank N.A. and its affiliates are neither sponsored by nor affiliated with DWS Investments Distributors, Inc., Deutsche Investment Management Americas, Inc. or any of their affiliates.

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