DWS Strategic Value Fund - Colonial First State

Risks of investing (continued)■ ■Underlying strategy risk:The underlying funds in whichthe Fund indirectly investsemploy a range of investmentstrategies and practices,each of which involve specialinvestment risk, different to therisks commonly associated withmore conventional investmentinto the various asset classes.For example, a short sellinginvestment strategy may magnifythe potential for investmentloss. The underlying funds mayalso use leverage which has thepotential to magnify potentialgains and losses. The successof these various investmentstrategies relies heavily onthe skills of the underlyingmanagers. K2 Advisors aim tomanage this risk by diversifyingthe DB Strategic Value FundLLC’s investment across a seriesof investable strategies andapproximately 15–35 underlyingfunds.■ ■ Fund risk: Fund risks includepotential termination of the Fund,change of the fees and expenses,or change in our investmentprofessionals. The Fund invests inthe DB Strategic Value Fund LLCwhich is managed by K2 Advisors.This underlying entity is notsubject to the same regulatoryrequirements as the Fund.There is also a risk that investingin the Fund may give differentresults than investing individuallybecause of income or capitalgains accrued in the Fund and theconsequences of investment andwithdrawal by other investors.We aim to keep fund risk to aminimum by monitoring the Fundand acting in your best interests.■■■■Manager remuneration: TheFund’s investment performanceis net of its fees and expenses.The Fund’s Performance Feeand any Performance Fees inthe underlying funds may createincentives to make investmentdecisions that involve a higherlevel of risk than may otherwisebe the case.Conflicts of interest: DeutscheAsset Management and theunderlying fund managersmay act in a similar capacityto, or be involved in otherfunds which may have similarinvestment objectives, leading toconflicting demands in allocatingmanagement time, services andother functions.■ ■ Use of derivatives: Derivativesare used by the underlying fundmanagers to gain exposure todifferent types of investments andto reduce risk. When derivativesare used, the Fund must be in aposition to pay all of the associatedobligations from the investmentsof the Fund. Risks associated withusing these tools might includethe value of the derivative failingto move in line with the underlyingasset, potential illiquidity of thederivative and counterparty risk(this is where the counterpartyto the derivative contract cannotmeet its obligation under thecontract). The aim is to keepderivative risk to a minimum bymonitoring the Fund’s use ofderivatives, by ensuring that itsobligations are met with respectto the derivative contracts and byentering into derivative contractswith reputable counterparties.We have a Derivative RiskStatement (‘DRS’), which explainshow we use derivatives. The DRSis reviewed annually. You canobtain a copy of our DRS by callingClient Services on 1800 034 402or from our websitewww.dwsinvestments.com.au.8