DWS Strategic Value Fund ARSN 089 896 837 Product Disclosure Statement 26 November 2009 Issued by: Deutsche Asset Management (Australia) Limited ABN 63 116 232 154 AFSL 298626 www.dwsinvestments.com.au A Member of the Deutsche Bank Group TRADITIONAL THINKING IS NOT ENOUGH.
How to contact us Please contact your financial adviser if you have any questions about your investment, or if you want to obtain up to date information on the DWS Strategic Value Fund or any other products within our product range. Deutsche Asset Management (Australia) Limited, the issuer of this Fund, has appointed Ironbark Asset Management Pty Ltd ABN 53 136 679 420 AFSL 341020 ( Ironbark ) to provide distribution services in relation to the current DWS Investments retail funds offered in Australia. Ironbark can be contacted at the numbers noted below. Retail clients can contact Client Services on: Phone: 1800 034 402 between 9.00am and 5.00pm (Sydney time), Monday to Friday Email: client.services@ironbarkam.com Fax: (02) 9256 6330 Or visit Ironbark s website at www.ironbarkam.com Advisers can contact Adviser Services on: Phone: 1800 678 519 between 9.00am and 5.00pm (Sydney time), Monday to Friday Email: adviser.services@ironbarkam.com Fax: (02) 9256 6330 Wholesale (institutional) clients can contact Deutsche Asset Management on: Phone: (02) 8258 2400 Fax: (02) 8258 1600 Or contact us in writing at: DWS Investments PO Box R1828 Royal Exchange NSW 1225 Important information Units in the DWS Strategic Value Fund ( the Fund ) do not represent deposits or other liabilities of Deutsche Bank AG (ABN 13 064 165 162), Deutsche Asset Management (Australia) Limited or any other member of the Deutsche Bank AG Group. Investing in the Fund is subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither Deutsche Bank AG, Deutsche Asset Management (Australia) Limited nor any other entity guarantee the performance of the Fund or the repayment of capital invested in the Fund or any particular rate of return.
Contents We encourage you to read this document in its entirety before you make any investment decision. Before you start 2 About DWS Investments and Deutsche Asset Management 3 About K2 Advisors 3 Fund features at a glance 4 About the Fund 5 What is the investment objective of the Fund? What does the Fund invest in? What are the strategy allocation ranges? Who is the Fund best suited to? What are the benefits of investing in the Fund? How do K2 Advisors manage the investments? What about the Fund s size and performance? Risks of investing 7 Understanding investment risk Managing risk General risks Risks specific to this Fund Investing in the Fund 9 Minimum investment Additional investments Cooling off Investor identification Accessing your money 11 Minimum withdrawal Transferring units Unit pricing and income distributions 12 Unit pricing Income distributions and reinvestment Timing changes Fees and other costs 13 Consumer Advisory Warning Fees and other costs Example of annual fees and costs Additional explanation of fees and costs 15 Management Costs Performance Fee Transaction costs (buy/sell differential) Maximum fees we are allowed to charge Different fees for different investors Product access payment Bank and government charges Tax Financial adviser remuneration Alternative brokerage arrangements Register of alternative forms of remuneration Keeping you informed 17 How do you obtain updated information on the Fund? Additional disclosure information Tax 18 Tax status of the Fund Will you be liable to pay tax on income you receive from the Fund? Tax reform taxation of financial arrangements Will you be liable for tax when you withdraw money from the Fund? Goods and Services Tax ( GST ) Do you need to give your Tax File Number or Australian Business Number? Investing through a master trust or wrap account 20 Additional information for investors 21 The Fund s Constitution Conditions for use of the fax transaction facility Borrowings Environmental, social or ethical considerations Complaints Privacy Conflicts of Interest Related party transactions Anti-money laundering Unit pricing discretionary policy Compliance Plan and Compliance Committee Auditors K2 Advisors Directors Guide to completing the application form 26 Application form i
Before you start You should read this Product Disclosure Statement ( PDS ) carefully before investing in the DWS Strategic Value Fund ( the Fund ). It will help you to decide if this Fund will meet your needs and will also assist you to compare this Fund to others you may be considering. Choosing the right managed fund as part of your investment strategy can be a very effective way to achieve your financial goals. It is important to understand that no two funds are the same, and that investing in a managed fund should be viewed over the longer term. If you do decide to invest in the Fund you must accept that the value of your investment will go up and down. Deutsche Asset Management (Australia) Limited ( Deutsche Asset Management ) is the issuer of this PDS and of units in the Fund. We also act as the Responsible Entity for the Fund under the Corporations Act. In this PDS, the terms we, us and our refer to Deutsche Asset Management. References to Ironbark throughout this PDS relate to their role as the current retail distributor of the Fund. In their role as retail distributor of the Fund, Ironbark is responsible for marketing activities relating to the Fund in the retail market. Ironbark will also house information relating to the Fund on their website as specified in this PDS. We are a member of the Deutsche Bank group of companies. Neither we, nor any company in the Deutsche Bank Group, promises that you will earn any return on your investment or that your investment will gain or retain its value. No Deutsche Bank Group company other than Deutsche Asset Management makes any statement or representation in this PDS. The Fund is an open-ended unlisted unit trust and a registered managed investment scheme for the purposes of the Corporations Act. It is available only to Australian investors. This PDS is not an offer or invitation in relation to units in the Fund in any place which, or to any person to whom, it would not be lawful to make that offer or invitation. Further, the distribution of this PDS outside Australia may be restricted by the laws of the place where it is distributed, and therefore persons who receive this PDS should seek advice on and observe those restrictions. Failure to comply with relevant restrictions may violate those laws. Units in the Fund cannot be issued to you unless you have received the PDS (electronically or otherwise) in Australia and you use the application form accompanying the current PDS for the Fund. Information in this PDS is general information only. It does not take into account your individual objectives, tax and financial situation or particular needs or circumstances. To help you assess whether this Fund is appropriate for your specific circumstances, we recommend that you get professional advice from your financial adviser and/or your tax adviser before investing. The information in this PDS is subject to change, and may be updated at any time. Where a change may be materially adverse to investors, or as otherwise required by law, we will replace this PDS or issue a supplementary PDS, and give investors notice as required or permitted by law. Where a change is not materially adverse, we may update this information on our website. If you have received this PDS electronically, we will provide a paper copy free on request by calling Client Services on 1800 034 402. You can also request a paper copy of any update material concerning the Fund, such as performance, that appears on Ironbark s website. All references to monetary amounts in this PDS are to Australian dollars (unless otherwise specified). Deutsche Asset Management is a member of the Investment and Financial Services Association Limited ( IFSA ). If you need help about investing generally, we recommend that you speak to a licensed financial adviser. The Australian Securities and Investments Commission ( ASIC ) can help you check if an adviser is licensed. ASIC has a website at www.asic.gov.au as well as a helpline you can call on 1300 300 630. 2
About DWS Investments and Deutsche Asset Management DWS Investments is the global retail asset management business of Deutsche Bank. Founded in Germany in 1956, DWS Investments is the largest mutual fund company in Germany 1 and among the top ten players globally 2 in terms of assets under management. DWS Investments is also the name under which Deutsche Asset Management (Australia) Limited, the Responsible Entity for the Fund, markets a range of its retail funds in Australia. Deutsche Bank s Asset Management business is one of the world s largest investment management organisations. We have offices in more than 60 countries, allowing us to draw on a breadth of investment skills, resources and insights to enhance the service that we deliver to Australian investors. Sources: 1 BVI, 31 July 2009; include Deutsche Bank products. 2 Simfund (US, Asia, Australia), 30 June 2009. About K2 Advisors K2 Advisors L.L.C. and its affiliate K2/D&S Management Co., L.L.C. (collectively K2 Advisors ) is a leading fund of hedge funds manager based in Stamford, CT with offices in New York, Chicago, London, Hong Kong, Sydney and Tokyo. Established in 1994, the firm is committed to preserving and growing capital by producing asymmetric returns with reduced volatility and low correlation to the traditional equity and bond markets. K2 Advisors utilises a suite of holdings-based analytics as part of its portfolio construction process. K2 Advisors is registered with the SEC as an Investment Adviser and has US$7.6 billion in assets under management as of 1 October 2009. K2 Advisors have been delegated the management of the underlying assets of the DWS Strategic Value Fund. 3
Fund features at a glance The table below is a summary of the key features of the Fund and a guide to where more detailed information can be found in this PDS. Product features Fund inception date 30 November 1999 Investment objective Seek to deliver consistent returns with low volatility and low correlation to the broader equity and fixed income markets by investing in a diversified range of relative value, event driven, specialist credit, long/short equity and other hedge fund strategies globally. Benchmark None Suggested investment period 3 5 years We recommend that you consider, with your financial adviser, the suggested investment period for the Fund in relation to your own investment timeframe. You should review this regularly to ensure that the Fund continues to meet your investment needs. Minimum investment requirements See page 9 for further details Initial investment $25,000 Additional investment $1,000 Withdrawal $1,000 Withdrawal dates are on the last business day of each month. One (1) month s notice of intention to withdraw is required prior to the withdrawal date. Withdrawal requests are normally paid within 20 business days from the withdrawal date. Main costs of investing in the Fund See page 13 for further details Entry/Establishment Fee Nil Investment Management Fee 1.10% pa of the net asset value of the Fund. Transaction costs (unit price buy/sell differential) Exit/Withdrawal Fee Distributions Income distributions Distribution payment options Keeping you informed Transaction confirmation Regular reporting Annual reporting Investment reports Other information Valuation and unit pricing APIR code A Performance Fee may also apply (see page 15). Nil Nil See page 12 for further details Any income available for distribution is usually distributed annually after 30 June. You can choose to have your distributions: paid to your nominated bank account; or reinvested as additional units in the Fund. See page 17 for further details You will receive a transaction confirmation each time a transaction is made. You will receive: a quarterly investor statement; and an income distribution statement (only if the Fund makes a distribution for the period). You will receive: an annual tax statement (only if the Fund makes a distribution for the period); and an annual financial statement (optional). Monthly investment reports providing updates on the Fund can be viewed on Ironbark s website at www.ironbarkam.com, as soon as practicable after the end of each month. Alternatively wholesale investors can contact us on 02 8258 2400 for information. We generally calculate unit prices on the last business day of each month. The unit price is generally finalised and released within 20 business days of the following month. In unusual circumstances we may calculate unit prices more or less frequently than once a month. DEU0109AU 4
About the Fund The DWS Strategic Value Fund is a multi-manager, multi-strategy fund providing access to a diversified range of global hedge fund strategies via investment in a Cayman Island company, DB Strategic Value Fund LLC. The Fund aims to achieve its objective by investing in the funds of hedge fund managers who are selected through a disciplined investment process. What is the investment objective of the Fund? The investment objective of the Fund is to seek to deliver consistent returns with low volatility and low correlation to the broader equity and fixed income markets by investing in a diversified range of relative value, event driven, specialist credit, long/ short equity and other hedge fund strategies globally. The Fund aims to reduce risk and achieve its objectives through a multi-manager approach by combining assets with low correlation and attractive risk adjusted returns. What does the Fund invest in? The Fund indirectly invests in a range of hedge fund strategies through investment in around 15 35 underlying funds from around the world. The maximum exposure to any single underlying fund is typically 10% of the net asset value of the Fund. We aim to ensure that the assets of the Fund are fully hedged between the US dollar and Australian dollar on a passive basis to minimise fluctuations in the Fund s returns caused by currency movements. The Fund may indirectly have exposure to derivatives for investment and currency management purposes. Derivatives are contracts that call for money to change hands at some future date, with the amount to be determined by agreed criteria. For example, we may believe that the US Dollar is going to appreciate relative to the Euro in which case we may purchase US Dollars whilst selling Euros. For further details on how the Fund manages derivatives risk, including our Derivatives Risk Statement ( DRS ), please refer to page 8. Currently we do not intend to undertake any long-term borrowings for the Fund, although the Fund s Constitution permits borrowing. Any borrowing is only on a short term basis and is capped at a maximum of 20% of the Fund s net asset value. Borrowings are made only where strictly necessary and are conducted at arm s length and for managing the Fund s short term liquidity. What are the strategy allocation ranges? The Fund will generally indirectly invest in the following strategy allocation ranges: Strategy Min (%) Max (%) Long/short equity 30 90 Relative value 0 40 Event driven 0 40 Specialist credit 0 40 Multi strategy 0 35 Global Macro 0 40 Currency 0 30 Other 0 25 Cash 0 35 A short description of the major strategies is as follows: Long/Short Equities: This strategy involves equity-oriented investing on both the long and short sides of the market. The objective is not to be market neutral. Underlying managers have the ability to shift from value to growth, from small to medium to large capitalisation stocks, and from a net long position to a net short position. Underlying managers may use futures and options to hedge. The focus may be regional, such as long/short US or European equity, or sector specific, such as long and short technology or healthcare stocks. Short selling creates additional risk of loss and the risk of limited upside and unlimited downside. Relative Value: This category includes strategies that seek to profit from the mispricing of related financial instruments. These strategies utilise quantitative and qualitative analysis to identify securities or spreads between securities that deviate from the fair value and/or historical norms. Typical strategies may include convertible bonds and warrant trading, long/ short equity basket trading and fixed income spread trading. Losses may be generated from spread positioning (that is, the difference between the bid and ask price for an asset or security) due to a price differential. Event Driven: This strategy involves investing in opportunities created by transactional events, such as spin-offs, mergers and acquisitions, bankruptcy reorganisations, recapitalisations and share buybacks. The portfolio weightings of some event driven underlying managers may shift to attempt to take advantage of such corporate events and distressed securities. Deal spreads may widen, causing losses. In addition, suitable opportunities may be difficult to find during cycles of low merger activity. Specialist Credit: This category involves corporate credit-related investment strategies. Depending on the underlying manager s style and focus, investments may be made in high yield, bank debt, distressed, restructuring, credit origination, special situations, credit relative value, mortgages and structured products. Credit quality may vary and managers may employ varying degrees of long and short exposures. The strategy in general has a value-based approach and issuer-related catalysts may play a role in unlocking value. Losses may be generated from an adverse movement in credit spreads or security-specific events. Multi-Strategy: Underlying managers using a multi-strategy approach combine several different strategies which contribute to the total performance of the underlying Fund. 5
About the Fund (continued) Global Macro: This strategy bases its holdings such as long and short positions in various equity, fixed income, currency, and futures markets primarily on overall economic and political views of various countries (macroeconomic principles). Other Strategies: This category includes strategies which are uncorrelated to traditional hedge fund strategies and may include, among others, insurance, energy/ commodities, weather, lending, currencies, emissions and royalties. The underlying risk factors in these strategies are diverse and include (but are not limited to) private loan default events, large natural catastrophes and price volatility in commodity futures and options. Market Neutral: Consists of an equity-based portfolio in which the manager attempts to neutralise long and short positions to reduce the impact of general market movements. If a balanced position is not maintained, the strategy will not be market neutral, and sectorspecific price movements may result in losses. You should be aware that the strategy allocation can change significantly and sometimes quickly without notice to you. This is likely to occur in limited circumstances. We generally actively adjust the investment allocation within the strategy ranges. However, we may temporarily move outside of these ranges due to factors such as significant cashflows into or out of the Fund. We aim to bring the Fund back to within its strategy allocation ranges as soon as is practicable. For the most recent strategy allocation of the Fund, please contact your financial adviser. Alternatively, you can visit Ironbark s website at www.ironbarkam.com or contact Client Services on 1800 034 402. Who is the Fund best suited to? An investment in the Fund is best suited to investors who: seek long-term capital growth and income; and accept the risk that volatility in investment returns may be experienced. What are the benefits of investing in the Fund? The Fund offers a unique opportunity to invest in specialised hedge fund strategies which have historically only been accessible by large financial institutions and high net worth individuals. Investors in the Fund can benefit from: Absolute return potential. The Fund has the potential to generate positive returns irrespective of the direction of traditional equity and debt markets; Global expertise. With thousands of hedge funds around the world, good manager selection is critical. The Fund provides you with access to expert manager selection and portfolio monitoring through K2 Advisors global expertise; and Diversification. Due to the nature of hedge fund strategies and their lateral investment approach, the strategies have generally had a low historical correlation to traditional markets. As the Fund indirectly utilises a multi-manager approach by investing in 15 35 underlying funds, investors have access to a diversified group of funds and markets, mitigating the risks typically associated with a single manager exposure. How do K2 Advisors manage the investments? K2 Advisors have been delegated the management of the underlying assets of the Fund. K2 Advisors investment philosophy is to generate consistent returns through unique investment opportunities within a risk-managed framework. The Fund indirectly seeks to diversify across different hedge fund managers, investment strategies and techniques in an attempt to reduce volatility and enhance portfolio returns. As many of the strategies generally seek to profit from misvaluations and pricing differentials between securities (not to profit from the overall direction of broad market movements), the Fund s performance may exhibit a low level of correlation to the broader markets. The Fund s investment process is based on a bottom-up approach in manager selection and due diligence combined with top-down inputs at a strategy level. This overall process incorporates both qualitative and quantitative analysis. Portfolio management is dynamic and subject to ongoing monitoring whereby managers are added or replaced as required over time. What about the Fund s size and performance? For the most recent fund size or performance information, please contact your financial adviser. Alternatively you can visit Ironbark s website at www.ironbarkam.com or contact their Client Services on 1800 034 402 or wholesale investors can call 02 8258 2400. A paper copy of any updated information will be provided to you free of charge on request. It is important to remember that returns are volatile and may rise and fall significantly, and sometimes quickly. 6
Risks of investing Understanding investment risk All investments are subject to varying levels of investment risk, and can generally go down, as well as up in value. This means that you can experience investment losses or investment gains. Volatility can be used as a measure of investment risk. In general, the higher the volatility of returns from an investment, the higher the risk and potential return. Different types of investments perform differently at different times and have varying risk characteristics and volatility. The value of a managed fund investment will rise or fall depending on the value of its underlying assets. Changes in the value of an investment can be significant and can happen quickly. Managing risk By diversifying your investment across a range of asset classes, you may reduce the overall volatility of your portfolio. This is because, if one asset class moves up, generally another asset class moves down, resulting in a less volatile investment portfolio and smoothing out of returns. It is important that you plan your investment strategy before investing. You should discuss this with your financial adviser and take into consideration aspects such as: your investment timeframe (how long you intend to invest); the level of volatility you are willing to tolerate; the level of diversification of your investment portfolio across the asset classes; and the level of return you expect from the Fund (growth and income return). The risks associated with investing in a managed fund may be general or specific to a particular asset class or fund. We aim to manage the impact of the investment risks of this Fund by using prudent investment guidelines. We cannot eliminate all risks and cannot promise that the way we manage them will always be successful. It is possible that investment returns from the Fund may be lower than expected, or there may be none at all, and the value of your investment could fall. General risks Investment objective risk: This is the risk that the investor s objectives will not be met by their choice of investments. Inflation risk: This is the risk that the prices of goods and services will rise faster than the value of the investments. Regulatory risk: This is the risk that a fund may be adversely affected by future changes in applicable laws, including tax laws. Risks specific to this Fund Liquidity risk: The Fund has limited liquidity due to the highly illiquid nature of its underlying assets. This means that the underlying assets of the Fund maybe difficult to purchase or sell. We manage this risk by placing restrictions on how and when withdrawals can be made from the Fund. There is no secondary market for units in the Fund, and none is expected to develop. Fund of hedge fund risk: The Fund is a fund of hedge funds and is subject to certain risks associated with an investment in hedge funds. These risks may include (but are not limited to) the use of derivative instruments and leverage, reliance on key personnel, the unregulated nature of hedge funds, broad investment strategies, investments in emerging markets and lack of liquidity and volatility in the underlying investments of the hedge funds. Currency risks: The Fund is denominated in Australian dollars, although the Fund s assets are held in US dollars and other currencies. The assets are generally fully hedged between the US dollar and Australian dollar on a passive basis with the intention to minimise fluctuations in the Fund s returns caused by currency movements. Short term movements in cash flows or fluctuations in market values may draw the Fund away from a fully hedged position. A significant portion of the trades executed in the underlying funds may take place on foreign markets, securities and currencies. Single manager risk: This is the risk that the investment strategy of any single underlying investment manager may not be successful. K2 Advisors addresses this risk by diversifying the DB Strategic Value Fund LLC s investment across approximately 15 35 underlying funds globally, which K2 Advisors monitor on a regular basis through their due diligence process. Market risk: Economic, technological, political, tax, regulatory or legal conditions, and even market sentiment, can (and do) change, and changes in the value of investment markets can affect the value of the investments in the Fund. K2 Advisors uses research and analysis to form a view on these matters, as best they can, and then rebalance the indirect investment mix of the Fund to reduce the impact. 7
Risks of investing (continued) Underlying strategy risk: The underlying funds in which the Fund indirectly invests employ a range of investment strategies and practices, each of which involve special investment risk, different to the risks commonly associated with more conventional investment into the various asset classes. For example, a short selling investment strategy may magnify the potential for investment loss. The underlying funds may also use leverage which has the potential to magnify potential gains and losses. The success of these various investment strategies relies heavily on the skills of the underlying managers. K2 Advisors aim to manage this risk by diversifying the DB Strategic Value Fund LLC s investment across a series of investable strategies and approximately 15 35 underlying funds. Fund risk: Fund risks include potential termination of the Fund, change of the fees and expenses, or change in our investment professionals. The Fund invests in the DB Strategic Value Fund LLC which is managed by K2 Advisors. This underlying entity is not subject to the same regulatory requirements as the Fund. There is also a risk that investing in the Fund may give different results than investing individually because of income or capital gains accrued in the Fund and the consequences of investment and withdrawal by other investors. We aim to keep fund risk to a minimum by monitoring the Fund and acting in your best interests. Manager remuneration: The Fund s investment performance is net of its fees and expenses. The Fund s Performance Fee and any Performance Fees in the underlying funds may create incentives to make investment decisions that involve a higher level of risk than may otherwise be the case. Conflicts of interest: Deutsche Asset Management and the underlying fund managers may act in a similar capacity to, or be involved in other funds which may have similar investment objectives, leading to conflicting demands in allocating management time, services and other functions. Use of derivatives: Derivatives are used by the underlying fund managers to gain exposure to different types of investments and to reduce risk. When derivatives are used, the Fund must be in a position to pay all of the associated obligations from the investments of the Fund. Risks associated with using these tools might include the value of the derivative failing to move in line with the underlying asset, potential illiquidity of the derivative and counterparty risk (this is where the counterparty to the derivative contract cannot meet its obligation under the contract). The aim is to keep derivative risk to a minimum by monitoring the Fund s use of derivatives, by ensuring that its obligations are met with respect to the derivative contracts and by entering into derivative contracts with reputable counterparties. We have a Derivative Risk Statement ( DRS ), which explains how we use derivatives. The DRS is reviewed annually. You can obtain a copy of our DRS by calling Client Services on 1800 034 402 or from our website www.dwsinvestments.com.au. 8
Investing in the Fund To invest, you need to complete the application form 1 accompanying this PDS. Send the completed application form and application money to: DWS Investments PO Box R1828 Royal Exchange NSW 1225 Cheques drawn on an Australian bank account should be made payable to Apps 1 A/C name of investor. You can also pay application monies electronically at any Westpac Bank or by bank transfer from an Australian bank account to the following account: Account Name: Apps 1 A/C Name of Institution: Westpac Banking Corporation Branch Number (BSB): 032 000 Account Number: 193 646 If you choose to pay your application money into the bank account, you must also send a completed application form to the address above. The effective date for valid applications will be the date we receive both your fully completed valid application form and the application money into our bank account. If we receive your valid application before 2.00pm on the third last business day of the month units will be issued at the price calculated as at the last business day of that month. Applications received after this time will be processed effective the following month. If you choose to pay your application money electronically, a completed application form must be sent to the above address. In order for your application to be processed in any month, we must receive both your application form and the application money into the Fund s account before 2.00pm (Sydney time) on the third last business day of that month. Money received prior to the prescribed application day will earn interest upon deposit with us until applied to the issue of units. Interest will be calculated daily, at a rate determined by us, and added to your application money prior to the issuance of units in the Fund. Allotments of interest occur on the last business day of each month. All interest earned is taxable. However, if you prefer not to have the interest added to your application money, simply complete the relevant section on the application form. Interest that is not added to your application money will form part of the Fund assets. You will receive a transaction statement to confirm the details of your investment. We retain absolute discretion to accept or reject any application in whole or in part. For the purpose of this PDS business day means any day on which banks are open for business in Sydney excluding a Saturday, Sunday or public holiday. Minimum investment The minimum initial investment is $25,000. We may waive this minimum requirement from time to time for certain investors, at our discretion. Additional investments You can make additional investments of $1,000 or more at any time, without having to complete a current application form each time. You may also make additional investments by forwarding payment, together with either a current application form or written notice to us. A written notice must include details of the investor s name, address, contact telephone number, account number, payment method and application details. We will treat such written notice as being duly authorised by you. You can fax 2 additional investment requests to us at (02) 9323 6411 or mail to: DWS Investments PO Box R1828 Royal Exchange NSW 1225 Additional investments will purchase units issued according to the initial application process described above. Please note that any additional investments are made under the terms of the PDS current at the time of your additional investment. 1 A valid application includes the application form and any investor identification information required see Investor identification section on page 10. 2 Conditions apply to the use of the fax transaction facility. Please see page 21 for further information. 9
Investing in the Fund (continued) Cooling off A 14 day cooling off period applies to initial investments in the Fund made by retail investors. This period begins from the earlier of: the date you receive confirmation of your investment from us; or the end of the 5th business day after the day on which we issue the units to you. You may cancel your initial investment during this period by informing Client Services in writing. The cooling off period will lapse if you transact on your account within this period. If you cancel your investment, the amount repaid will generally be adjusted for any changes in the Fund s unit price, reasonable transaction and administration costs, and any tax payable. This will be in accordance with the withdrawal provisions on page 11. Investor identification Australia s Anti-Money Laundering and Counter-Terrorism Financing legislation requires the verification of the identity of our investors. We request that you provide the information set out in the Guide to completing the application form on page 26. We may also ask for additional information to verify the identity of an investor, or any underlying beneficial owner, if we consider it necessary. We will process your application on the date we receive the requested documents, completed to our satisfaction, in accordance with the application procedures detailed above. This may result in you receiving back either more or less than you originally invested, which may have tax implications. Cooling off rights are not available to wholesale investors, as defined by the Corporations Act. 10
Accessing your money You may request to withdraw all or part of your investment in the Fund at any time. Withdrawals can be paid by cheque or by direct credit to an Australian bank account. To request a withdrawal: complete a withdrawal form, which you can obtain from Ironbark s website at www.ironbarkam.com; or write to us providing details of the number of units to be redeemed or the dollar value required, the account number, fund name and the name in which the investment is held. Please ensure that the withdrawal request is signed by all relevant parties to the investment. Note that we cannot pay withdrawal proceeds to third parties. You can fax 1 your withdrawal request to us at (02) 9323 6411, or mail it to: DWS Investments PO Box R1828 Royal Exchange NSW 1225 We manage the Fund s liquidity by placing restrictions on how and when withdrawals can be made. Withdrawals are restricted to the Fund s withdrawal dates, which are on the last business day of each month. You must also provide notice of your intention to withdraw at least one month before the next withdrawal date. We must receive your withdrawal request before 2.00pm (Sydney time) on the last business day before the month in which you wish to withdraw. For example, if we receive your withdrawal form before 2.00pm (Sydney time) on 30 November, we will process your withdrawal using the Fund s unit price for the withdrawal date of 31 December. You will receive a transaction statement to confirm the details of your withdrawal. We normally pay withdrawals within 20 business days after the relevant withdrawal date, although the Fund s Constitution allows for a longer period. For more information, a copy of the Constitution is available by downloading the document titled DWS Strategic Value Fund Constitution on our website at dwsinvestments.com.au or by contacting Client Services on 1800 034 402. We are not obliged to satisfy any withdrawal request. If we decide not to satisfy a withdrawal request, we will notify you as soon as practical. In certain circumstances the Constitution permits us to suspend processing withdrawals from the Fund. For example where there are significant changes to the liquidity of the Fund s underlying assets. Please refer to the Risks of investing on page 7. If the Fund is illiquid, you may only withdraw from the Fund in accordance with the terms of the current withdrawal offer made by us under the Corporations Act and the Fund s Constitution. Once your units are redeemed you become a creditor in respect of those units. You can find the current redemption price on Ironbark s website at www.ironbarkam.com. Minimum withdrawal Unless you are withdrawing the total investment, a minimum withdrawal of $1,000 applies for the Fund. In certain limited instances, we can also withdraw some or all of your units without you asking, including if your account falls below $25,000. The Fund is not listed on any stock exchange like the Australian Stock Exchange, so you cannot sell your units through a stockbroker. Transferring units You may transfer units in the Fund to another person. To do this, you need to send us: a signed and completed, and where relevant, stamped standard transfer form; and a completed application form from the PDS for the Fund current at the time, completed by the person to whom the units are being transferred. We reserve the right to decline certain transfer requests at our discretion. A transfer involves a disposal of units, which may have tax implications. We recommend that you obtain tax and legal advice (as necessary) before requesting a transfer. 1 Conditions apply to the use of the fax transaction facility. Please see page 21 for further information. 11
Unit pricing and income distributions Unit pricing Unit prices are generally calculated monthly based upon the net asset value of the Fund divided by the number of units on issue in the Fund. However, in unusual circumstances, we may calculate unit prices more than once in a month, or less frequently, as permitted by the Fund s Constitution. The Fund s Constitution allows unit prices to be adjusted for transaction costs (also described as buy/sell differential ). In the case of an application price, the price may be increased by an allowance for the estimated costs of the purchase of assets in the Fund. In the case of a withdrawal price, the price may be reduced by the allowance for the estimated costs of the sale of assets in the Fund. The Fund does not currently charge any transaction costs. For more information, please see Transaction costs (buy/sell differential) section on page 15. We will exercise any discretion that we have under the Fund s Constitution for the Fund in relation to unit pricing in accordance with our unit pricing policy. You can obtain a copy of our unit pricing policy at any time on request, at no charge by visiting our website at www.dwsinvestments.com.au or by contacting Client Services on 1800 034 402. You can find updated unit prices for the Fund on Ironbark s website at www.ironbarkam.com. Income distributions and reinvestment The Fund intends to distribute income, if any, to you annually calculated as at 30 June, in proportion to your unitholdings on these dates by no later than two months from the end of the relevant distribution period. Special distributions of capital or income to be made at any time during the year. By completing the relevant section of the application form, you may choose to have your distributions: paid directly into a nominated Australian bank account; or reinvested into the Fund by purchasing additional units. If you do not nominate how you wish to receive your income distributions, we will automatically reinvest your distributions as additional units in the Fund. Reinvested units will be issued at a price determined immediately after the end of the relevant distribution period, and will not be subject to transaction costs. We may terminate and/or restart this distribution reinvestment facility at any time. We will notify you if this occurs. Unit prices fall after the end of the distribution period to reflect the distribution entitlements. This means that, if you invest just before the end of a distribution period, you may find that you quickly receive some of your capital as income. Similarly, if you withdraw your investment before the last day of the distribution period, you will receive your share of any accrued income as capital. Timing changes We will notify you if we change the frequency of distributions or the frequency or timing of calculating unit prices. 12
Fees and other costs Consumer Advisory Warning DID YOU KNOW? Small differences in both investment performance and fees and costs can have a substantial impact on your long-term returns. For example, total annual fees and costs of 2% of your fund balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. You may be able to negotiate to pay lower contribution fees and Management Costs where applicable. Ask the fund or your financial adviser. TO FIND OUT MORE If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission ( ASIC ) website (www.fido.asic.gov.au) has a managed investment fee calculator to help you check out different fee options. Fees and other costs This document shows fees and other costs you may be charged. These fees and costs may be deducted from your money, the returns on your investment or from the Fund assets as a whole. This section of the PDS does not cover taxes. The tax implications of investing in the Fund are generally described in the tax section of this PDS on page 18. You should read all the information about fees and costs because it is important to understand their impact on your investment. Type of fee or cost Amount How and when paid Fees when your money moves in or out of the Fund 1 Establishment Fee: The fee to open your investment. Contribution Fee: The fee on each amount contributed to your investment. Withdrawal Fee: The fee on each amount you take out of your investment. Termination Fee: The fee to close your investment. Management Costs None None None None The fees and costs for managing your investment. Investment Management Fee: Performance Fee: Service fees Investment Switching Fee: The fee for changing investment options. 1.10% pa of the Net Asset Value of the Fund. 15% of the percentage increase in Net Asset Value after ongoing fees are deducted (adjusted for the issuance and withdrawals of units, and distributions) in excess of the UBS Australian Bank Bill Index. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. The Investment Management Fee is calculated and accrued daily and payable monthly in arrears on the last business day of each month out of the assets of the Fund. The amount of the Investment Management Fee can be negotiated by wholesale investors. For more details, refer to the Additional explanation of fees and costs section on page 15. The Performance Fee (if payable) is accrued monthly and payable half yearly as at 30 June and 31 December. For more information on when the Performance Fee is payable please refer to Additional explanation of fees and costs on page 15. Not applicable. 1 Adviser service fee may also apply. For more detail refer to the Additional explanation of fees and costs section on page 15. 13
Fees and other costs (continued) Example of annual fees and costs These tables give an example of how the fees and costs for this product can affect your investment over a one year period. You should use these tables to compare this product with other managed investment products. Example where no Performance Fee is payable EXAMPLE BALANCE OF $50,000 WITH A CONTRIBUTION OF $5,000 DURING YEAR Contribution fees Nil For every additional $5,000 you put in, you will be charged $0. PLUS Management Costs 1 EQUALS Cost of Fund 1.10% pa of the Net Asset Value plus 15% outperformance over hurdle rate 2. And, for every $50,000 you have in the Fund you will be charged $550.00 each year. If the requirements of a Performance Fee to be paid are not met, no Performance Fee will be charged. If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged fees of: $550.00 3 What it costs you will depend on the fees you negotiate with your fund or financial adviser. 1 The Management Costs and Performance Fee include all the direct and indirect costs for managing the Fund, however it does not include the expenses incurred in operating DB Strategic Value Fund LLC. Refer to Additional explanation of fees and costs on page 15 for more detail. 2 See Performance Fee on page 15 for a more detailed description of how the Performance Fee is calculated. 3 The example assumes that the $5,000 was invested at the end of the year and that your balance remains constant at $50,000 throughout the year (i.e. no further contributions are made and the Fund s unit price does not change) and fees are not individually negotiated with us. The example does not include any ongoing financial planner commission charged or bank or government charges, which may reduce the value of your investment further. The example does not include the effect of any transaction costs (including the buy/sell spread) or abnormal expenses which may be incurred by the Fund. Example where a Performance Fee is payable EXAMPLE BALANCE OF $50,000 WITH A CONTRIBUTION OF $5,000 DURING YEAR Contribution Fees Nil For every additional $5,000 you put in, you will be charged $0. PLUS Management Costs 1 EQUALS Cost of Fund 1.10% pa of the Net Asset Value plus 15% outperformance over hurdle rate 2. And, for every $50,000 you have in the Fund you will be charged $550.00 each year. And, if the requirements for a Performance Fee to be paid are met, you will be charged $225.00 3 (outperformance of 3% x 15% x $50,000) based on the value of your investment. Refer to Additional explanation of fees and costs on page 15 for more detail. If you had an investment of $50,000 at the beginning of the year and you put in an additional $5,000 during that year, you would be charged fees of: $775.00 4 What it costs you will depend on the fees you negotiate with your fund or financial adviser. 1 The Management Costs and Performance Fee include all the direct and indirect costs for managing the Fund, however it does not include the expenses incurred in operating DB Strategic Value Fund LLC. Refer to Additional explanation of fees and costs on page 15 for more detail. 2 See Performance Fee on page 15 for a more detailed description of how the Performance Fee is calculated. 3 The Performance Fee is based on an absolute outperformance of the Fund to the hurdle rate by 3.00% over the year and the Fund is at or above the previous level at which the fee was paid. This is for illustrative purposes only and there is no guarantee that the Fund will outperform the hurdle rate by this amount in any one period. Refer to Additional explanation of fees and costs on page 15 for more detail. 4 The example assumes that the $5,000 was invested at the end of the year and that your balance remains constant at $50,000 throughout the year (i.e. no further contributions are made and the Fund s unit price does not change) and fees are not individually negotiated with us. The example does not include any ongoing financial planner commission charged or bank or government charges, which may reduce the value of your investment further. The example does not include the effect of any transaction costs (including the buy/sell spread) or abnormal expenses which may be incurred by the Fund. Please note that this is an example only. The actual cost of investing in the Fund over one year will depend on how much is invested, the investment balance of your account (which varies over time), the number and type of transactions over the year, and the net asset value of the Fund. 14
Additional explanation of fees and costs Management Costs The Management Costs comprise the Investment Management Fee of 1.10% pa of the net asset value of the Fund and, where appropriate, a Performance Fee (see below). The Management Costs do not include costs or expenses incurred at the underlying DB Strategic Value Fund LLC level as these costs and expenses are reflected in the Net Asset Value of that underlying fund. These costs are indirect costs to the investor and will reduce the return to the investor. For the current financial year, the estimate of costs relating to DB Strategic Value Fund LLC are approximately 0.19% per annum of the Net Asset Value of that fund. This may change over time and actual expenses may be more or less than this estimate. These expenses include custody, fund administration, accounts, audit and legal in respect of DB Strategic Value Fund LLC. Performance Fee We are entitled to receive a Performance Fee if the Fund outperforms the hurdle rate. This fee is accrued monthly and payable half yearly as at 30 June and 31 December. The Performance Fee is 15% of the Fund s percentage increase in net asset value after ongoing fees are deducted (adjusted for issuance and withdrawals of units, and distributions ( adjusted NAV ) in excess of the UBS Australian Bank Bill Index ( hurdle rate ). The Performance Fee will only be paid on increases in adjusted NAV in excess of the previous level at which the fee was paid (also known as the high-water mark). The Performance Fee is charged at a Fund level and may not reflect the performance achieved by each individual investor. Transaction costs (buy/sell differential) The Fund s Constitution allows unit prices to be adjusted for transaction costs (buy/sell differential). Any buy/ sell differential is an additional cost to you. There is currently no buy differential for units in the Fund as at the date of this PDS. Maximum fees we are allowed to charge We may increase all the fees for the fund, or introduce new fees due to reasons such as changing economic conditions and changes in regulations. The Constitution for the Fund sets the maximum amount of fees we can charge. The maximum fees we are allowed to charge are set out in clauses 19.1 to 19.3 of the Constitution which is incorporated by reference in this PDS, please refer to page 21. We cannot charge more than the Constitution allows, and unitholder approval is required to change the Constitution in this regard. Different fees for different investors Individual negotiation of Management Costs may be available to sophisticated and wholesale investors, as defined in the Corporation Act, such as Investor Directed Portfolio Services ( IDPS ) operators and superannuation master trusts. Differential fees may be charged but only in accordance with the Corporations Act requirements and any ASIC Class Orders on differential fees. Sophisticated or wholesale investors wishing to negotiate their fees should contact Client Services on 1800 034 402. We will not enter into individual fee arrangements with retail investors. Product access payment Some IDPS operators charge an annual access payment for offering the Fund on their menu. The product access payment is not an additional cost to you and will not reduce any returns you may receive. Bank and government charges In addition to the fees set out in this section, standard government fees, duties and bank charges may also apply to investments and withdrawals (including dishonour fees and bank charges) and may be payable by the investor. Tax All fees in this PDS are shown inclusive of the net effect of Goods and Services Tax (GST) unless otherwise stated. For further information regarding the tax implications of an investment in the Fund, please refer to page 18. Financial adviser remuneration Financial advisers may charge you for advice about your investment. The amount of adviser service fee is agreed between you and your financial adviser. You can choose to authorise us to pay your financial adviser for services rendered by completing the relevant section on the Application Form. For example, the agreed percentage amount of your investment may be calculated as at 20 March, 20 June, 20 September and 20 December of each year, and paid to your financial adviser soon thereafter. Alternatively, you may choose to pay your financial adviser an upfront fee. The fee is treated as a withdrawal from your account and may have tax implications. If you wish to cancel or change the payment of this fee to 15